Amazon vs. Target: One Is Riding the AI Boom, While the Other Faces a Consumer Spending Squeeze

Amazon.com (NASDAQ:AMZN) and Target (NYSE:TGT) are two of America's largest retailers, but their revenue trends reveal a widening gap in growth. While Amazon continues to expand through e-commerce, cloud computing, and digital services, Target is working to regain momentum in a challenging retail environment.

A closer look at their quarterly revenue highlights how differently these companies are navigating changing consumer spending habits and broader economic conditions.

Amazon.com vs. Target Revenue over the last 8 quarters.

Amazon.com: Consistent Double-Digit Revenue Expansion Over Time

Amazon generates revenue through its global e-commerce operations, Amazon Web Services (AWS) cloud computing platform, advertising, and subscription services. Its diversified business model provides exposure to both consumer spending and enterprise technology investment, helping sustain revenue growth across different economic environments.

Amazon's latest earnings highlight the strength of these revenue streams. In the third quarter of 2026, revenue increased 12% year over year to $201.9 billion, supported by growth across its retail and cloud businesses. AWS was particularly impressive, with revenue jumping 39% to $46 billion as demand for cloud computing and artificial intelligence (AI) infrastructure accelerated. Meanwhile, North American retail sales increased 6%, demonstrating continued expansion despite a more challenging consumer environment. Together, these businesses have helped Amazon maintain double-digit revenue growth, with its rapidly expanding cloud division becoming an increasingly important contributor to overall sales.

Target: Modest Sales Rebounds After Initial Revenue Declines

Target generates revenue via its nationwide network of retail stores and e-commerce operations, selling everything from groceries and household essentials to apparel, electronics, and home furnishings. Its business relies heavily on consumer spending, particularly discretionary purchases, making revenue sensitive to inflation, household budgets, and broader economic conditions.

Target's latest earnings suggest its sales recovery is gaining momentum after a period of declining revenue. In the second quarter of fiscal 2026, net sales increased 5.3% year over year to $26.5 billion, while comparable sales rose 3.8%. Importantly, customer traffic increased by 3.6%, suggesting that more shoppers are returning rather than sales growth being driven primarily by higher prices. Digital comparable sales also climbed 8.7%, supported by growing demand for same-day delivery.

Why Revenue Matters for Investors

Revenue here refers to the data provider's standardized income-statement revenue line item, which helps investors measure total sales volume and overall demand before accounting for business expenses.

Quarterly Revenue Trend Data for Amazon.com and Target

Foolish Take

Target's recent sales stabilization is encouraging, but the broader trend remains relatively flat. Consumers continue to prioritize essential purchases over discretionary spending, creating challenges for retailers dependent on apparel, home furnishings, and other nonessential goods. Target's efforts to improve pricing, attract shoppers, and strengthen its digital business could eventually support a turnaround, but consistent revenue growth has yet to materialize.

Amazon, meanwhile, has several advantages extending beyond traditional retail. Its e-commerce operations continue to grow, while AWS, advertising, and subscription services provide additional revenue streams. Strong demand for cloud computing and AI infrastructure offers opportunities that Target simply doesn't have.

All things considered, Amazon offers a more attractive risk-reward opportunity than Target. Its consistent revenue growth, diversified operations, and expanding cloud business provide a stronger foundation for future returns. The key risk to monitor is Amazon's substantial AI infrastructure spending, which could pressure cash flow if returns fall short of expectations. Nevertheless, Amazon's established growth engines make it a more compelling investment than Target, whose turnaround remains uncertain.

RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Target. The Motley Fool has a disclosure policy.